I'm a Citizen returning home after 7 1/2yrs abroad and will be a resident for tax purposes in Oz so all should be cool if I have to go that route
Originally Posted by Andrew Williams
I would like to draw the attention of anyone reading this thread to the following forum/website;
It's a bit dated, but does talk about the issue of remortgaging a UK home when it is to be rented out, and using that money to buy another home to live in, as well as some of the tax implications. I doubt that anything has changed tax wise since this debate occurred.
My point is, beware of the risks and tax implications before embarking on this route:-
As I understand it, the rent you receive is fully taxable income. It is only the interest on your mortgage which is deductable. i.e.
- principal repayments are not deductable
- interest on an equity release loan designed to raise cash for a deposit on a home either in UK or OZ, may not be deductable.
- there are of course other tax benefits/deductions for maintenance and other expenses, but:
The UK rules appear to be similar to OZ in relation to this issue.
I recommend you speak to a professional tax adviser if you are in any doubt and be certain of the true "cashflow" implications. I'd hate to hear of anyone getting hit with a massive tax bill they were not expecting.
In particular, do the numbers to check and see if you may be better to sell, and bring your equity tax free (even if less than you might have hoped) to end up with a smaller home loan in OZ as compared to having a small? original loan on your UK property that is tax deductable + an equity release loan that is not + the loan on the new OZ property.
Note: I do not offer UK tax advice (or OZ tax advice for that matter!)
If you do the numbers and you can still afford to keep the UK property - great. Best wishes all.